LME lead hits 33-month low on trade war, aluminium bucks trend

  • Aluminium, however, rose after reports of reduced supply of raw material alumina from China
  • LME copper shed 0.7% to $6,083 a tonne

London: Lead prices sunk to the lowest in nearly three years on Monday on worries that industrial metals demand would suffer from renewed US-Chinese trade tensions.

Aluminium, however, rose after reports of reduced supply of raw material alumina from China.

Metals slid along with other financial markets after the trade war between the world's top two economies ratcheted up a gear and China vowed on Monday never to surrender to external pressure.

"Trade frictions weigh on future demand expectations so you're naturally going to get caution on asset allocations for commodities on the whole and base metals in particular," said Colin Hamilton, director of commodities research at BMO Capital.

Lead was the hardest hit partly because seasonally this was the weakest period for lead demand while recycled supply was healthy, Hamilton added.

Benchmark lead on the London Metal Exchange was down 1.3% to $1,798 a tonne by 1030 GMT, its lowest since 9 August 2016.

Shanghai lead dropped to as low as ¥15,940 ($2,322.23) a tonne, its weakest since August last year.

Chinese alumina: Alumina output would be curtailed in China's Shanxi province due to environmental issues, according to reports. "To me, it looks like that's going to take out about 4% of Chinese alumina capacity," Hamilton said.

Aluminium price: Reduced alumina supply and higher prices for the raw material to make aluminium lifted three-month aluminium, the only LME metal in positive territory, by 0.1% to $1,809 a tonne.

Copper prices: LME copper shed 0.7% to $6,083 a tonne. The net speculative short position on the LME had expanded to 2.1% of open interest, back to levels not seen since late January, Alastair Munro at broker Marex Spectron said in a note.

Copper smelter maintenance: Copper prices could gain some support from falling output in China as some smelters there are scheduled to go into maintenance in May, said copper analyst He Tianyu of metal consultants CRU.

Copper stocks: Copper stocks in warehouses tracked by the ShFE dropped to a 3-1/2-month low on Friday, while copper inventories in LME-approved warehouses fell to a two-week low, the latest data showed.

China cars: Also weighing on metals prices was data showing that vehicle sales in China, the world's top auto market, fell 14.6% in April annually, marking the 10th consecutive month of decline.

Other prices: LME zinc fell 1% to $2,605 a tonne, nickel lost 0.8% to $11,835 and tin gave up 1.1% to $19,415.

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